AMP chief economist, Shane Oliver, continues to hold a bearish view on Australian property prices, where last month he forecast “average capital city prices falling 10-15% from their April high out to mid-next year with Melbourne most at risk and likely to see a 15-20% decline”.
Talking to Domain’s Property Unpacked podcast, Shane Oliver warned there are “more downslides to come” for Australian property values:
“We’re still going through the pandemic, and we’ve seen weakness in property prices around the country. Generally speaking, prices have softened.
“I think there’s more downslides to come because quite simply we have a lot of people protected by JobKeeper, a lot of people protected by bank payment holidays – there’s almost 500,000 mortgages on payment holidays. Those protections will come to an end and expose the property market to more falls.”
According to Oliver, the Australian property market also faces three longer-term headwinds, namely: a prolonged period of high unemployment, much lower levels of immigration (impacting Sydney and Melbourne the most), and the shift to working from home.
Finally, Oliver believes that the Australian property market could be in the doldrums for five or six years.
I will add that the 30-year tailwind from falling mortgage rates is over, meaning that growth in property values will need to come from incomes, where growth is also likely be sluggish:
The full podcast is below.